[ whistling ] >> put your soul into it. >> have a great day everybody, make sure you join us tomorrow morning. right now it time for "squawk on the street." ♪ luck be a lady >> luck has been a lady for some slel lucky people. two wins power ball tickets, one in virginia and one in arizona. morning, welcome to "squawk on the street." luck's been on the side of the bulls lately, after yesterday's turn around. the first time we have been down 100 and up 100. we got some lower yields in both

italy and in spain. our road map begins with a search for a major retailer, any major retailer who didn't miss on november comps. gap, macy's, target, all disappointing. is it all due to sandy and what does it mean for the holidays. >> tiffany is not a statement on lucksy, but rather company specific. >> quite near meets with the president today. . >> and we have another upgrade for research in motion. this time at goldman-sachs saying the blackberry 10 will not only beat expectations but also put the company in the black by fiscal '14. >> target, macy's and kohl's reporting unexpected declines.

number of retailers blaming sandy for the lackluster results, david and jim. they say the second half of the month wasn't so bad, but still a lot of white knuckles as somebody said about the holidays. >> i think that one of the untold stories may still be exactly how bad sandy was. sandy is going to turn out to be a $100 billion storm. but i think it's a shutdown. it was the shutdown of a major part of the infrastructure of the nation. i'm going to go with the retailers who blame sandy. i'm going to take them at face value. >> so macy's they say record setting volume when it comes to thanksgiving, but they're not going to offset sandy. target said that sales in the month were hurt by weather, basically. >> i think this one was bad enough.

that there's gravitas to it. i keep thinking about maybe tirico, the ceo of ahc, it's been a good season for him. he's shipping and he gets paid. but they may not be selling what he ships. >> inventories have been kept very low, that means perhaps less discounting took place. so you may end up with a better margin than actually anticipated when we see is bottom line, even though these top line numbers don't look good at the moment. >> there's no basic materials to rebuild. almost all the factories where you had this material, at least in the northeast were near shoreline. you're getting stories of mercedes being destroyed left and right, because mercedes didn't want any bad cars out

there. a tremendous shortage of materials needed to rebuild. and you can only imagine, what does that mean to target? i think it means we're just mystified and couldn't get out. we definitely underestimated this. >> want to get to steve liesman who's got some great news. >> jim, i agree with you from day one, they said it was a $50 billion event, we have done some recording, we're showing it $70 billion to $90 billion. but hurricane sandy is not expected to derail the company's economy. the damage from sandy was worse than first anticipated. there's 75,000 jobs lost in new jersey and new york. and the $1.4 billion economy is -- in the quarters ahead, in

the fourth quart, he sees a quarter to a half point hit to national gdp directly related to the effects of sandy. talking about the national economy, the bright spots include housing and consumer spending, the negatives include business investment along with weak manufacturing. the congress and the administration must address the fiscal cliff. any plan to reduce the deficit should quote start small and then grow very substantially over time. so dudley basically agreeing with the take that sandy is a bigger event, and then you want to add on top of that dudley's concerns about the fiscal cliff coming our way. >> what does this mean for the retailers because right now we have the impact of sandy, because they're confined pretty much to november.

we had this seasonally strong period for retail sales especially for the holiday season. but does that mean the kruk -- money is being spent instead on gypsum board and other materials that need to be bought for reconstruction? >> there is a big disconnect here, we had terrific consumer confidence numbers, so i think the nation itself should be stronger. the high income areas, remember, these were high income areas, a lot of times we're used to storms not hitting the high income. but i do think that we're going to see it pushed to 2013. this is not fukushima where they just decided they couldn't rebuild. this is major areas that once we get the materials are going to produce tremendous 2013 numbers at the begins of the year. the rebuild is not ready to be done. there's still too many national guards people telling you you

can't go where you need the rebuild. >> population density and high income density is exactly where the storm hit. fewer shares per household. maybe that's why pier 1 comps for the quarter at least were pretty good. >> and earnings were good, they said they had a two cent hit from sandy. >> we have these outliars and home depot isn't going to sell through what they have. the misunderstanding of this storm -- i have a lot of friends who are contractors and they are eager to get to work. think about that. this storm happened, they're eager to get to work, but they don't have the materials. you don't have materials you can't rebuild. a lot of people are concerned about ininsurance, can they

rebuild? will insurance pay? we look at hurricane andrew in 1992, which ended up being a big boost to the gdp. >> i still want to know what happened to those $70 billion wa worth of bearer bonds in new york city. there's part of this sandy storm that we haven't heard anything about, there were vaults that were soaked that hold a lot of money. that are very, very wet. >> for the outfit that got hurt entry.ou did have to put in an >> not to mention a lot of law firms and things that were down here as well, had a lot of documents, old documents that were downstairs. >> we're still really figuring out what the impact of sandy was. >> a terrific article about stockton today, housing

shortages happening in very strange areas, that was in bloomberg.com. the claims are still okay. they're not terrible. gdp was not bad. that's why again, if you settle the fiscal cliff, right now there's a combination of trying to pick up the pieces, which turn out to be harder and a sense of, well, wait a second, if you're a big company, why hire now if i'm going to have to fire later because of the cliff. >> in the premarket session, shares of tiffany taking a hit. the luxury goods taking a hit at 49 cents a share. also lowing it's full year forecast, with smaller than expected profit margins, it's a bad product mix in terms of higher priced items with lower margins. all of those things hitting them this morning. >> i really want to know, we have got two companies today

that i regard as being poor exporters. tiffany and kohl's. retail retailers, they say, kohl's has missed the mark. i think you have a combination of sandy related problems and companies that don't seem to be getting it. >> all right, higher precious metal and diamond costs also cited, what we have heard from a lot of the jewelers across the board. this is the third time that they have cut their full-year estimates. the stock is down single digits for this year. this hit, 14%, maybe sort of a catch up trade, you know what? the third time they're cutting estimates. tiffany has more troubles than we thought it had. >> i think that's a smart way to look at it. we have to start thinking that the problems here may not be in the stars, but themselves, i

like to quote shakespeare. >> you do, more or less every morning i can get a little dose. brush up on your shakespeare, start quoting him now. >> i do think that -- look, we're in disarray here in the northeast and we don't seem to even realize the kind of disarray we're in, and it not until you try to call the contractor and the contractor says look, i'm not in business, i got wiped out. it's just taking a little bit longer. i'm hearing people say, you don't understand, we can't rebuild. because we cannot rebuild, you do not see what can happen when they're able to. >> what is wrong with kiss me

indica kate, it's a good movie. >> futures are on the rise following yesterday's nearly 107 point rally on optimism to avoitd negotiations -- tim geithner will meet with congressional leaders on capitol hill. one of them was goldman ceo lloyd blankfine. >> on this you can move closer, but it's always the end that's the greatest difficulty. so it's hard to tell. i would say and maybe this is helpful to you, if i were involved in a negotiation like this, and everybody was purporting to be where they are, i would say that an agreement is reachable. >> i think that's a key bite. there's a couple caveats, he

says where people are purported to be in terms of their positioning. but if this man who grew up making deals thinks that a deal is possible and he's being honest about it, that is somewhat significant, yeah? >> david i'll put it right to you. bla blankfein gets paid if they make a deal. the tea party is not going to get 2%. there's no gross credit involved if you get this deal done. >> i think it's great that lloyd is saying that they're closer. >> but only the future of the nation is at stake. >> the future of the nation, is that only a quarter point? it's a quarter point in gdp, but it's a quarter point in the -- layer the capital system on what happens in washington. but it has seemingly nothing to

do with people who deal with compromise. you compromise, you lose the core constituency that elected him. >> let's at least get the tax cuts extended for the middle class and deal with the other part later. some people may be happy to kick the can here, at least in the near term. >> i think the president is -- do you think the republicans can deliver on the republicans? i think lloyd blankfein. coming back to that quote to dave cody, terrific guy, he said listen, i find myself in the radical middle. compromise is radical right now. the stock market is saying a

deal gets done by jan 1. >> yes, it is. that's what yesterday was all ball -- will lawmakers arrive at a deal to deal with the fiscal cliff? rand paul is defending the northwest pledge not to raise taxes. but the rim rally months on, this time black berberry is on rise. nobody said an inkjet had to be slow. or that printing in color had to cost a fortune. nobody said an all-in-one had to be bulky. or that you had to print from your desk. at least, nobody said it to us. introducing the business smart inkjet all-in-one series from brother. easy to use. it's the ultimate combination of speed, small size,

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go ahead man citing a variety of benefits for the january introduction of the blackberry operating system. dare i say, this is march of the penguins. >> yeah, it is, we have seen the stock which you know we have reported on many times, heavily shorted. a lot of this move has been short covering. suddenly they're saying maybe there's more value than the

intellectual property. in gold man's case, they're saying now it has a $3 billion value. previously theirest mate was just cash and ip. now you have $3 billion because you think blackberry is going to do well. >> it's in 50, it's in test labs right now with the phone companies. >> but they fired a lot of people, everyone wants an alternative. it still has a big installed base, very large in indonesia. >> jakarta, huge move. >> this is very positive, and i come back and say that this was written off for dead, i look at the green mountain coffee trade, i have been thinking about this. people stayed -- the shorts maybe have had too long a stay in some of these stocks. green mountain was not that bad

a quarter. >> and that was the case also? gold man noted that it was at a record high, 23 shares outstanding. >> they're making -- >> is there a difference in this call from goldman-sachs versus other calls. we h >> the stock was up 14% last friday, that was a very short, not being a volume day. >> is this different because it's coming from goldman or is this just a another stock glomming on. >> this one is filled with data saying that the quarter is going to be good. let's get the charts. >> i love charts. i love estimates that there's a 30% chance that they will profit. >> that's a 70% that it fails.

>> the canadian -- was in the 27% to 28%. >> where is mr. johnson on that turn around. >> the stock is higher, maybe the reason why macy's didn't do so well is jcpenney's coming back. i called sandy, just so sandy fans, i got the erstimate from y beach property and i was lucky. one house stands, the other goes down. >> tools you need to climb the market's rocky terrain. the mad dash is coming up next. and is austerity measures the way to close the deficit. i'm only in my 60's... i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses,

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jim's mad dash is focusing on retailing. >> i think we should focus on johnson & johnson who's going higher. reiterating the sale. they're going to have to preannounce again, this is the pc in death rattle mode, it's the problems with you and it's the problems with dell. they talk about pc's down, average price for pc's down 5%.

carl are they going away? >> how does it connect to microsoft. >> you got to take a step back and think maybe we cut the earnings price here. they're starting to sound more and more like value traps. what worries me about microsoft. it doesn't matter. pcs are bad. carl, i got to tell you, this bring your own device, the rim versus the mini, that piece by david pope today in the new york times, buy the apple mini, that's the enemy of intel. it's the enemy. >> while some republicans are breaking away from the northwest tax pledge, another is sticking solidly with it. we'll talk to remember senator rand paul of kentucky about possible solutions for tackling the fiscal cliff. plus it's been six days

since black friday and tiffany is off to a rough start. there's an 8% decline. how is that going to affect other retailers. we'll find out when we come right back. [ male announcer ] this is joe woods' first day of work.

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we got a hardcore reversal from the up side yesterday, as the market continues to be on a hair trigger alert. the president meeting with mitt romney, although no press on that one. and we will also get some housing data coming up in about hal half an hour's time. the exchange is playing muse six in honor of this bank, which is being called america's most exciting bank. >> that's what they call themselves. and maybe that's why they have this music, because it's actually quite loud. >> let's see if they start dancing the executives. >> the race is on to see which

bank is the most exciting in this country. >> a new trend here. >> in the meantime, here's the opening bell for a thursday morning. again brook shire -- nasdaq to the nyc and over at the daz damage, fran drescher, star of the sitcom, a great comedian. still responding to the news in the world of social media, whether it's living social and some reported layoffs or what andrew mason said about his tenure at groupon. >> to fire himself, he's not ready to fire himself. >> that was the first step i thought on the right path. i mean he just needs to go one step further, a la mark

zuckerberg and go on a conference call and be humble. >> apple today up 8, i still think david boeing is the most influential tech writer of all time. and the apple miniis going to end up being a huge success. >> i felt -- it's interesting to think about a product that basically a lot of us have thought was stillborn immediately. amazon i'm sure is terrific. don't forget the nook. >> keeping an eye on special dividends and we also have a screen from our own markets desk today david, insider ownership 20% or more. debt to assets less than 25%.

oracle, berkshire, es este lauder. >> if you want to get it done you have to announce pretty soon. we have seen if there's large insider ownership. when you have a ceo that does not have a lot of stock, they don't want to do a dividends, they want to do a buy back. they have options, but when you have ceos who have a lot of stock, they prefer a special dividend. one question i continue to have, though, is was it in the plan or is it something they considered and only now, and why not now, because the tax rate is going to go up so much. they're shoring up the balance sheet, right now they're paying

so little. but it's interesting to question that. >> costco is a big one. i'm going to give you two that aren't on our list. i think visa and mastercard, they're brimming with cash, they can do whatever they want. they are fantastically run companies. >> that's not on any list. >> they're my dark horse, breeders cup finishing last perhaps picks, but i like visa and i like mastercard. >> companies that could borrow or issue debt in order to pay a special dividend, so they also screen for on top of cash, on top of insider ownership. two times leverage, that's sort of the magic number, below that companies could really lever up. so they had names like micros t microsoft. ely lily, interestingly, devon energy. there's so many lists going

around. so a lot of them do come in the month of december. guess by the way, check out the shares in ges. today the stock is get a nice boost. >> you talk about all the special dividends, in the meantime, fxc trading above 7.5%. spanish bonds amazing. italian, 1.48%. we're buying italian paper. >> for a good trade, that's got to be some of the good things that are out. >> we want to talk about things that are good that we forget about because when they're bad, we talked about them every day. >> europe is such a good trading partner, at least in the past

based on where brussels was going. >> we had ten straight that were good. production numbers still good there. i'm a believer in china, but, boy, that stock market has been a gonner. >> record low in china even though the data has been getting marketedly better. it's fascinating to trade there. >> i'm a believer, but every day you come in and you feel smacked on the head. >> also troublingly, same store sales were only up 1% while inventories were up 11%. so that's not a good thing. >> future discounting is a possibility. >> europe was strong in terms of sales for the quarter. oddly. of the the americas, not so strong. >> my question was on silver, is silver a higher margin business? why did some analysts point out a week or so for sales as an

indicator of how weak the quarter is? >> tiffany is an enigma here. let's talk about retailers who are doing well. kroger, they are a supermarket but they are beating the numbers. how did they do it? a huge percentage of private labels. con agra. >> when you go to hong kong, let's say, and you buy jewelry, i'm told, they charge you by weight of gold and then they charge you labor. so you know exactly what you're paying for and they pass the costs on. they look at the spot market and they say you've got two ounces

of gold, the spot market that day is x number and then here's your labor costs. >> we need to hear from adrian shapiro, who's now cfo of david yourman. >> good morning, everybody, so look, we're up again, this is face call cliff happy talk, politico had the big story this morning, talking about the contours of a deal, 1.2 trillion increase in taxes, entitlement cuts at 2.4 billion. they're getting more specific on the numbers, that's what the market wants to see. we'll see on that. what happened to retail? a lot of people are passing around notes trying to figure out, how did we get this so wrong? >> gauging the effects of hurricane sandy was really, really difficult. a lot more difficult than people thought. estimates have been coming down

on retail for weeks and i have been watching the estimates come down, but they didn't come down enough. so trying to gauge sandy was really hard, how many stores were closed, how many people cut back their spending. remember another wild card was the election. what did that do? a lot of people said, we don't know but it obviously affected it somehow. it's very hard to quantify sandy and the elections overall. macys said we had a record black friday, but it wasn't enough to overcome the effects of sandy. no longer will nordstrom do monthly sales. less than 20% of retailers now report monthly sales. it's really hard to gauge anything based on these retail sales number. you know the whole world was up? europe was up to a new high. boy were the bulls wrong on

this. i was part of it unfortunately. in september and october, we were all bullish on china. a big restructuring, nothing's happened. that's why the market is drifting lower, concerns about bank capitalization rates, this calls for big buy backs on the main land. the grandfathers in shanghai who trade in that market are not trading as much, they're not as interested. every list i have seen is cash a percentage of market cap. usually it's about 7% and above. i see ray theon has a really good one. o'reilly automotive was another good one. >> thank you, bob. >> shadow inventory, that's

down, copper developing, you can't get the copper. a lot of things happening that are very bullish. let's go to rick santelli. >> gdp like the employers considered a big one. you can see that around 8:30 eastern, you had every so slightly an uptick in rates. we had a rather large division in our second look at quarter gdp. some interesting stories explaining where that came from. the inventory is good and you build it up and -- i would have expected we would have had a much bigger selloff in treasuries. last time we had the initial report on october 26, first look

at third quarter gdp, when it was released at 2%. the chart shows we were down close to ten basis points, why? because that was considered somewhat weak, even at 2%. so the argument goes, why did we get such a small reaction on a big upward revision? a, the market may not believe it. b, we might be in a new realm of gdp, it's always a big number when it's released. we're halfway into the fourth quarter. finally, let's look at an intraday chart of the euro versus the dollar. you can't make this stuff up, what's the high in various markets? 130.00 right on the nose. you think there's some option optionality. >> this major focus, we should not lose sight of what this is

doing, the euro getting stronger. >> commodities traders are certainly paying attention to currencies very carefully and we are looking at the impact that that is having on industrials commodities in particular. we have of course seen some optimism on the u.s. budget deal. we're also looking at the uptick in gdp data, but we're also watching some technical levels, we have been in this range of $85, $90 for true value. a moving average for copper, momentum in that commodity as well. gold holding it's own after that decline in the last session. right now we're looking at gold above the 1720 level. we'll also be keeping our eye on

natural gas, we'll look at that inventory data. >> back to you. >> thank you very much. as talks over the fiscal cliff continue, you will want to hear what republican senator rand paul had to say about deficit reductions and the controversial norquist tax pledge. also ahead -- >> still to come, with the fiscal cliff getting closer. >> if i was involved in a negotiation like that and everybody was purporting to be where they are, i would say an agreement was reachable. >> former centr [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time.

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s s. and there's a look at the dow heat map as the dow is up by 60 points or just about a half a

percent. ibm, microsoft home depot and intel, up just a fraction of a per sent. millions of people out there played the record breaking power ball jackpot last night, but most didn't win a dime unfortunately. what is the best use for all those losing tickets we're all stuck with. tweet us at "squawk on the street" and we'll air your answers throughout the morning. >> are you stuck with one? >> i'm stuck with three, actually. >> did you buy one? >> yes. >> you did? >> just to improve the odds off of zero, basically. >> two instead of one. you're really up there now. >> when we come back, an iconic brand is heading back to bankruptcy court. hostess is in the midst of

winding down. coming up, so you didn't win the power balls, well, don't let it get you down. cramer's here and while he may not have a half a billion dollars to give you, he does have six stocks in 60 seconds. when "squawk on the street" returns. [ male announcer ] this december, remember -- you can stay in and share something... ♪

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♪ another one bites the dust ♪ another one bites the dust ♪ and another one's gone ♪ and another one's gone ♪ another one bites the dust >> we will have one of the queens of debt reduction, alice rivlin will join us to bring some sense into this discussion about the fiscal cliff. do you think you can make 12% in this market next year? we're also going to talk more about tiffany. can you make money on tiffany here? >> six stocks in 60 seconds, talking retail today and target specifically.

>> the stock should be down to 60, if you really believe stock is bad. this is the surprise of the morning. >> what's new on taser. the gun trade, they don't like taser and taser's not lethal. cabelas is my play there. >> tim kin, i visited with him just a moment ago. the shareholder want -- give me a break, go to their foundry, you can't separate the two. >> and ppg. >> on the whole, ppg is the best run company in the world. >> and carmax. >> there are not a lot of new cars, this is a sandy trade. >> kohl's says it was an online christmas. you can't buy in the stores? you buy from amazon. i'm liking amazon so much, deep

in the money calls, please, because you have comfort on the down side. >> we're going to be watching d.c. a lot today. we know geithner's meeting with congressional leaders, you've been questioning on a frame work coming together. >> they're starting to hear the ticking of the clock. maybe it's our right-hand corner clock tick that we're doing. i think they're watching cnbc down there. we have got europe an the radar screens. >> what they call an open lane to a large degree. >> i think it's more we can get a spare, if we get a good deal, we get a strike with a good deal. >> last night on "mad" u you said you were a former mountain climber. we are working our way through this abyss.

so are you getting a shopping list together for the climb? >> indeed and i'm looking at these higher level stocks. this home depot could turn out again to be 2013's stock, with the sandy kicker. they are the place where the contractors are going to go to. frank blake is the man, he's the man right now in this country, whether it be washington talks or whether it be the rebuild. >> what is on "mad" tonight. >> i'm looking at exactly these place where you're getting a good yield. anything more than 5% i am all over because the bond funds i think could be disastrous if we have inflation next year. you need to be in the 5% to 10% stocks. bond funds bad, reits that yield more than 5% are good. >> do you want to touch on copper today before we go on what's happening? >> copper, jjc, this thing is a

barometer of -- things may be better. some may say it's inflation, carl, because there is this sandy story, $100 billion, going higher. you need a lot of copper to rebuild. >> that was a little frightening today at the top of the show. >> i know that was, better to be lucky than good, as karen cramer always told me. >> big week full of housing data continues in just a few moments. we'll get pending home sales just minutes away. plus groupon's board holding its regularly scheduled meeting today. and a boom for ardent investors. [ male announcer ] you are a business pro.

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"today" as the fiscal cliff looms are investors taking a gamble in nevada? >> there's not a lot of confidence out there now. rise above road trip, continuing coverage throughout the day on cnbc. >> welcome back to "squawk on the street," as we count down to the breaking news due out at the top of the hour, impending home sales are down. the price target now stands at 16 bucks a share, they are optimistic as we come to the

january launch of blackberry. don't take into account the positive tail wind that blackberry will have. we have had a number of analysts out there recently who have raised their price targets as well as estimates and ratings. >> okay, let's get some breaking news now, on home stats. >> good morning, simon, we're here outside bankruptcy court in white plains new york for the latest in the saga of the hostess bankruptcy. liquidation, now the courtroom is reconvening to hear arguments about whether some 19 hostess executives should be getting a retention payout of $1.75 million, these so called bankruptcy bonuses. the interest is not necessarily the amount of the payoff going to the executives, but the fact that should you really on principle be paying bonuses or

intention payouts to a company that will not exist in 13 weeks. this is a pretty common practice though and one that these kaurts hear a lot. faking a look at some recent bankruptcies, kodak, attempting to pay investors $8.9 million and beech craft, an ongoing situation. a 3.5 million dlrsz payout for its executives. what do you think about it guys? 1.75 million, that's $7,000 a week for a company that won't be on the docket. >> the pending home saeles inde from the national retailers, september was also revised higher and the realtor's index is now 13.2% above october of 0 2011.

this is the highest level for the index which measures signed contracts not closings since march of 2007 and on a year over year basis, the index has now been rising for 18 consecutive months. the rocket is no thhe activity region to region, the northeast which realtors say did receive some impact from hurricane sandy, was essentially flat with sales down.01%. in the west where investors continue to devour the home market. >> we should point out, diana, on those good numbers and of course not the only good numbers we have got this week, the s&p has gone positive for the month. the flat line 1412, and we're well above that now at 2016.

the treasury secretary getting ready to meet with harry reid. >> the treasury secretary is actually here in the building at the capitol, a few minutes ago he walked into harry reid's office for that meeting. he's going to be there for about 45 minutes, what he's going to say to harry reid is anybody's guess at this moment. he just said good morning to those of us in the press and walked on by as he usually does. we're expecting that he's going to go from harry reid's office over to the speaker of house's office and meet with john boehner. and interestingly enough, he's going to meet with paul ryan. where that goes is also anybody's guess, but before that meeting, the speaker's office telling us they accepted the meeting only on the condition that the white house bring up some specific spending cuts and

get serious about spending, i talked to senator lindsay gram, a republican, just before geithner walked into the building. he said he doesn't think there's that much asphalt on the road for reins to talk about tax increases at this point, he want f s to see some specific offers from the democrats. >> we'll be coming back to you not too long from now. now to a big earnings mover in the luxury retail sales. brian, i read through your note that you issued this morning. you said still weak but not dismal. same store sales up 1%. inventories climbed 11%. this is not dismal, they are cutting the third year. >> as i look through the results

today and there's no question on the face of them, they look really bad. tiffany did earnings per share of 45 cents, we were at 62 cents, i think the street was at 63. the crux of that miss was gross margins. i don't want to make it sound good, this is not good. but sales were fine. let's look at sales at tiffany kind of on a multi-year stack basis. what happened in the quarter was they sold more high end pieces and less low end silver type products. that mix affected gross margins. >> that on the surface sounds good that you're selling higher priced items and less lower priced items, but in terms of margins, what does that do to the margin mix? >> there would be a knee jerk reaction as far as the markets.

if you're selling more high end products, i think that's a testament to ongoing strength in that segment of the consumer population. i think at the low end piece, i think you guys made mention on your show a little while ago, i think tiffany's to some extent the weaker silver sales reflect ongoing struggles for that lower end consumer, if you will. in my view it's this fashion mix, i think tiffany's been struggling against the more up and coming jewelry brands. like david irwin. i think they're still seeing the effects of this. >> but tiffany doesn't sit at the top end of that luxury rocket, does it? that's a very important thing for people to realize. tiffany is not there the same way as other brands are internationally. >> it depends, i have this conversation with clients all the time. i go into tiffany's stores, kind of jokingly i was down there at the soho store a couple of months ago.

we saw a $2 million pink diamond ring, that was the only high end piece. if you look at fifth avenue, the flag star store. that's not necessarily a seller. >> tiffany, i think, what differentiates tiffany's from a lot of the brands out there is they have a lot of wide spectrum of products. they also have a lower end business, which is largely focused on silver. >> brian, your confident in terms of the consumer at this point, especially the high end consumer, but what makes you so confident that tiffany itself will be able to execute, if it was in fact a fashion miss that helped contribute to this dismal showing in sales this quarter. >> what keeps me interested is

the stock here, i always take valuation into perspective. tiffany's down 7% to 8%. from a history historical sense, they're near a trough valuation. expectations are already pretty low for tiffany's shares. i put out a piece yesterday is that as you look over the next few quarters, as you look at the way tiffany moves it's product through the system, they're going to have lower import costs. that should benefit their gross margins going forward. >> what do you think happened to that inventory that they have left over in the quarter. does that forebode, i mean tiffany doesn't typically discount, so what happens to this inventory? >> basically what happens is they always continue to move slowly through that inventory. unlike other retailers you

really don't have a markdown risk. this delayed benefit of the lower impact costs. >> brian, we're going to leave it there, thanks for your time. >> in the midst of the looming fiscal cliff, we somewhere got a lot on our plates as we finish up the year and get ready for 2013. so what's the best way to manage your portfolio in these uncertain times. the ceo of bny mellon investment management. thank you for being here. good morning. is the fiscal cliff a buying turnlt? because today, goldman, saying that all of this is going to pass, we're going to get growth of 10.9%. and 12% in the market on prices next year and they'll rise .

>> i think people are going to rotate from protecting the value of their portfolio. >> i think people have been very significantly focused on not losing money. and so they have held cash, they have held more conservative investments. i think it's made sense to. there's been tremendous uncertainty. and for the record, i don't think the uncertainty is necessarily going to melt away, whether we get a fiscal cliff deal or not. what i do think we're starting to see is you have the largers economies in the developed world, all throughout europe, and japan, during sandy, a lot of what happened tot the bank of japan, you have central bans that are going to work with governments. chairman bernanke hasn't even commented on it himself, that there's an incentives to weaken

their currency. they're going to own stocks to protect that. >> you believe people should buy stocks now? >> i think people should buy some stocks now in order to protect against the transition from deflation to inflation. we have been in a deflationary period now for five years and it's really been driven by the collapse in the credit systems. people are saying we have printed all this money, why vsht we got inflation? you still have central banks working even closer with governments to create that transition. >> a lot of people have reported that velocity number. do you also think that you should come into next year either shortening the long bond where it has not done well, or at the very least start taking money out of the bond funds? >> i think the bond fund story is very poorly told. if you look at the flows into monday fund, it's absolutely

changed during the last year or so. but amount of the floes into bhond fund were short to intermediate. you haven't seen, you know, the average investor scrambling and getting the most duration they possibly can at the long end of the curve. you have people with very long liabilities, to cover those liabilities. the biggest buyers, central banks who have to own highly rated government bonds. >> like a jolley santa behind the scenes in this market, you've got the fed buying assets at the rate of $85 billion a month. >> yes. >> and the suggestion from charles says that should can't. >> it makes the mix free rates, so many investigator -- investors have built their mod

dl dells that are -- so i think the biggest imp indication is to try to understand what economic growth is likely to be in an environment where developed economies are all experiencing central banks trying to weaken their currency. >> i just want to break in here as people can see the debt go at the bottom of our screen. a man who ran nbc universal has been officially named the -- at turner and mr. zucker taking that job that has been reporteded on the last couple of days as something that is very likely, it has now been confirmed, replacesing jim wolton who has reported to be in that job. i'm just reading through the memo. >> so let's marry what you said about next year to what you can do right now. if you're going to buy

suppositions in certain areas, a lot of these high dividend payers, stocks that have gained a lot this year, what do you buy now in preparation for a run next year? >> we really like large multinationals that can move resources around the globe. the strength in economies, the growth in the world is happening in the emerging world. we're very focused here in the u.s. on u.s. relations and trade with other countries, but trade is now happening, south-south trade, you have malaysia and new year's trading aggressively across the south region with brazil. i think the growth in the emerging world is not to be missed. but a good way to play it is through u.s. nationals. they can benefit from some incredible effect know logical things happens. 3-d printing is phenomenal. but you have technological

advances that are going to allow countries as i said thailand, the philippines, indonesia, brazil continuing to develop their domestic economies. >> what do you say to a client or buddy who says your stock portfolio makes sense you may want to buy some art. >> if the orld's largest economies are weakening their -- so i think art and real estate in some areas does make sense. art starts to be an investment that isn't for everyone, right, because it's not super liquids and you have to really understand what you're buying. you can also get killed in those environments. >> when you talk about multinationals, the conversatwh happening around the world. the indians and the brazilians

are raising the rates. >> i think one of the primary drivers, when you think about going into the emerging world, understanding the political situation, the legal situation is very important. so i think that those countries to really have long-term growth and sustainability. i think those countries will go through fits and starts but they need to know that opening market will really improve their chances of building their domestic economies. i wouldn't put any one bet on any one country. but if you look at growth around the world. we're going to be looking from a damping of inflation. the emerging world is very important. >> good to see you curtis. >> we want to quickly point out the euro. it did crack 130 at one point, it backed off a little bit.

but optimism across europe did make some yields. >> a phenomenal -- this is overtwo months, this cross has moved 4%. that's extraordinary. >> it's enormous. >> and also of course the feds continuing to print money is what drives the dollar down. that's probably the bigger issue. >> a new deal for groupon, the stocks down about 85% since the ipo, so should the ceo be exchanged for an older, wiser, business leader. but first -- still to come with the fiscal cliff getting closer -- >> if i were involved in a negotiation like this and everybody was purporting to be where they are, i would say that an agreement was reachable. >> we will help you rise above the rhetoric. former federal reserve vice chair alice rivlin, all that and much more on "squawk on the street."

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serves as director of the national budget. recently served as a mechanical of the simpson bowles commission. you look lovely as always. i'm told you're wearing a rather important pin. >> yes, i have on the pin. i'm in favor of rising above all this part san ship and getting deal done. >> you think that's possible, but you're not sure what that can happen by year's end. you want to give your expectations? >> i think it depends on what it is. very important not to go over the fiscal cliff.

and i believe they will get a we'll that increases the taxes or most of them and the mindless spending cuts in the sequester. that doesn't mean they will have all the details of a grand bargain. i think they will have a frame work for making the grand bargain in the next session of conk. -- congress. but that's just more hope than a firm prediction. i don't see how it can really fail. because everybody stands to lose if we go over the cliff. >> alice, do you sense, is there the possibility of turmoil if we go through, say, just new year's eve itself and don't have a deal, can treasury withhold some of these -- can they maintain some of these withholding rates to the degree where we don't see money start to fly out of

consumer's pockets on january 1? >> yes, i think they can. but it will be difficult and awkward. and on the spending side, agencies can hold back on the cuts for a while. but it's a very messy thing to do. we shouldn't have to do it. an orderly government should be able to function, so that we don't have to play games with the budget in order to get past an artificial barrier. >> alice, gong, it's simon hobbs. i'm not sure if you're aware, but this broadcast is airing in britain and asia and other places, they won't understand why the united states doesn't abandon the tax breaks that it gives on mortgages, as though countries did often decades ago. they don't understand why the united states doesn't have a federal sales tax like the rest of the world does, either one of

those options could go a long way in solving the problems that we have and is the debate that challenging? >> absolutely. but we're talking about two different things here, we're talking about what has to happen in the next few weeks to avoid the fiscal cliff. that is not going to include a thorough revamping of our tax code, desirable as that may be, because there just isn't sometitime to do it. i am not ruling out by any means a serious tax reform early in 2013. i think that's very important, the simpson-bowles commission which i was on, which recommended drastic dax form that would broaden the base with things like reducing the home mortgage deduction. >> if you go through this process, in order to get a deal, simply kick the can six months

and six months again, you can never do the things that you're talking about. >> i don't think that's right. i think we just had an election, we have a republican party that lost and realizes it lost and is being less firm on its no tax increase pledge. we have a democratic president and a more democratic senate that has just won. and wants to get a deal because we could have chaos if we don't get one. so i think the outlines of a bargain between the two parties are there, that they can put a frame work in place, before the end of the year that will allow them to avoid the cliff and then get into serious negotiation over the details of the bargain, within this frame work, and by frame work, i mean real numbers. >> alice, you mentioned the two budget commissions that you were a part of and that those two

commissions had actually committed to getting rid of those deductions and exclusions. as you take a look at the deductions that are on the table or may be on the table, to say you know what? that's not good for the economy at this point. and i'm really thinking of the home mortgage deduction. >> i think the home mortgage deduction could go. >> entirely? >> beneaneither of the commissi recommend recommended removing it entirely. the deduction which primarily is an advantage for high income people into a credit up to a limit. that would mean that people with much more modest incomes, who now don't itemize their deductions would get the benefit of this credit. it would be hard on high income people with very large houses.

but we have just built too many too many large houses, you would have to phase it out. but i think that would be a good solution. >> on the subject of tax reform, i know in simpson-bowles there was a proposal to lower corporate taxes, do you think that is still a possibility if in fact we still move to additional tax reform in 2013? >> i do. i think that broadening the base of the income tax, the corporate income tax is also a good idea. getting rid of a lot of special provisions that riddle the tax and make it more complicated. but that we can lower the rates. the united states is at the high end of developed countries, on corporate rates. but we have a relatively narrow base. we should change that. i think there's pretty broad agreement on that. the really, real sticking point is what to do about the individual income tax rates with

republicans dead set against raising rates on high income people. but now beginning to say, well, we could raise the revenue we collect from those people. >> right. >> i think there's a compromise there. >> finally alice, should republicans insist on having each raise of a debt limit be responded to with additional cuts? or should democrats insist on, you know what? we shouldn't have to go through this every time. i has come into play as simply sort of whoever's holding the congress can hold over the rest. we ought to set the debt limit in accordance with the actual budget. we need to set the debt limit so that it reflects what the

regular process has decided we ought to spend, what we ought to collect in revenue and how much we need to borrow. >> not sure how much that view is alice, but it's good to see you again. >> in the wake of that interview with alice rivlin, a live interview with senator paul rand of kentucky. where some republicans say they will break with protocol. with grover norquist and his tax pledge to reach the deal on the fiscal cliff is sticking in solidarity with it. we're asking what he would be willing to compromise on. >> as we mentioned, house speaker boehner and other leadership meeting with treasury secretary geithner. boehner is expected to hold a press conference afterwards at 11:30 a.m. and we will bring it to you live.

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the lexus december to remember sales event is on. this is the pursuit of perfection. welcome back to "squawk on the street," a bearish number coming from the energy department on natural gas storage levels. natural gas storage levels increased by 4 billion per cubic

foot. we're also looking at storage levels that are basically on par with a year ago, record levels that we hit a year ago and there is abundance supply. the other factor that has been driving natural gas futures lower have been the weather forecast, above normal temperatures expected for the first two weeks of december. if that continues through the month, we could definitely see natural gas fall below the $3.50 mark. again after this bearish report we got from the energy department, we'll have more "squawk on the street" right after this. just about who lives in the white house, it's about who lives in the yellow house, the green, and the apartment house, too. today we not only honor the oval office, but we honor the cubicle, and the home office as well.

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about an hour into trading a bright spot on -- pending homes up 5.2 with a high of almost two years. freddie mac says the average rate on the 30-year fixed edged up in the past week to 3.32%.

>> large companies are accelerating their bonus wages so that their company will not receive a tax hit. >> they have been fielding plenty of questions about accelerating bonus payments from the new year into 2012. that question failing to lead to action by most of their corporate clients for a couple of key reasons. act rel rating bonuses so their well paid employees can dodge taxes next year. rationalizing this to the public and to the government would prove very tough. for large firms, administration issues including getting comp committees determining what wage to pay and getting stock in the hands of employees by year end is too massive an undertaking for many with just a month to go in the year.

now pay experts say interest in act sell traiting bonuses peaked after the election, but once they understood the hurdles they have to clear, they dropped it. while smaller firms may accelerate payments too because the administrative burden is mangle. one ceo who does not want to be identifieded says that -- this will allow the firms to escape mentioning the move in their annual proxies. should budget talks fail as which approach year end, advisers say some ceos may revir revisit paying out bonuses early. >> hesitant of the government's ability to avoid the fiscal

cliff, many high income earns are taking steps to sell their houses, stocks and even businesses before the end of the year. you're going to name names? >> one of the advantages of being wealthy is that you could manage your income around taxes and the wealthy are doing a lot of income managing right now, with tax rates scheduled to go up next year for capital gains, dividends, salaries, they are racing to take their gains before january 1. many rich entrepreneurs, they have their own private companies, if they planned to sell those businesses anyway this year, they're struggling to do it now. george lucas sold his -- a broker in miami told me that the sale of a $38 million home is --

wealth advisers tell me the rich are also churning or selling stocks if they have a large gain, they're taking that now. we're seeing that selling pressure in the market, you guys have been talking about that a lot recently. some of the biggest money is coming from dividends, both private and public companies. taxes on dividends could more than triple next year, more than 100 companies have already declared dividends this month. savings for company insiders, well, it's huge. let's take a look at sheldon aid adelson, he pays a tax of 180 million a year, after the cliff, a $520 million. steve wynn, he only saves a mere $20 million. this isn't to say these tax

hikes will happen, or that the rich knowing that we don't, with that kind of savings, it's just not worth taking the risk. >> whoever wins this power ball, assuming they win the whole thing. you pay your taxes up front, it's a $16 million in savings. so whoever wins it, if they're listening, take that lump sum, get that check, put it in the bank before december 31st. >> if you just won the power ball and that much money, just go and have a good time. don't worry about the 16 million zl million? >> walmart just accelerated their usual dividend and brought it to this year as opposed to next. in reference to adelson, that's a good company as of late. they just added more. >> choice hotels did the same thing. >> some of these companies are doing special dividends have a great deal of cash. >> and here's the really

interesting, what this does, we look back at 1986 when cap gains went from 31% to 36. we saw a doubling of capital gains income taken in that one year and then it -- we're going to see a huge amount taken this year, next year we're going to' tax revenue crash and of course the anti-tax guy will say that this proves that higher taxes don't generate revenue. that's going to be the broader impact of all this. the amount of income they'll take this year -- >> i understand. i'm just saying that's a motivate for. a huge amount. >> can i also point out that in the meantime as these stocks go ex-dividend, it could be a very choppy market next year. >> i wout could be a record.

>> when taxes are driving the buying and selling decisions in markets, that's going to make for really volatile markets, absolutely. >> nice to see you, you're welcome any time. budget deal hopes are clearly running high, a lot of the stock markets are trading higher around the world. still ahead on the program, republican senator rand paul of kentucky will talk about tasking the fiscal cliff without budging on norquist tax pledge. some of those big name retailers are out of fashion with the traders, but could they represent a deal for you? as a long-term investor, we'll break down the numbers and tell you how to play it. next on cnbc. [ male announcer ] if you suffer from heartburn 2 or more days a week,

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squawk on the tweet on this thursday, millions playing for the jack possibility in power ball. what's the best use for all those power ball tickets we're stuck with. jc says send them straight to washington to say i had a much as you do. throwing losing power ball ticket over the fis calling cliff ahead of us to soften our landing. >> i'm not sure that's going to work. it will be tough we have v if we go over. >> i didn't, and my friends from the uk were going to too, unfortunately, i had to go and do something and didn't buy a ticket. >> hope it was important. >> it was for cnbc. >> because we understand you would have one if you had.

>> let's take a check on shares of yum! brands. that's actually been on a string of all-times highs, look at that 20-year performance, 806%. let's take a look at a list of retailers, with many of them now with same store earnings here, and kohl's leading among the laggards here. >> so it's not -- >> the month of november, sandy was at the very end of the month of october. so, yes, there was carry over impact, of course. >> vice president biden was at the opening of d.c.'s first costco this morning. and the full report is just coming out now. biden also availed himself of several of costco's food samples and looking like he enjoyed them. and this is from the official

pool. unless the stock has fallen as the morning's gone on. >> still ahead on the program, we're talking to rand paul on the fiscal cliff. and rick santelli waiting in the wings. rick, good morning, what are you working on? >> actually i'm working on some poetry. i'm talking gotsome something that robert frost wrote, two roads diverged in the woods, i took the road less traveled. how does is that figure into the santelli exchange? it figures into reform, rvrks fi. and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest.

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the we mentioned earlier in the program the phenomenal move over the last two months. the euro against the dollar, up almost 4%. i'm not sure -- i thought we had a bigger move than that.

not quite sure. maybe something wrong with the charts there. let's pick up the tale, noun the less. head of research and trading for aspen joins us now live in our money in motion segment. good morning to you. what do you think of euro/dollar here? >> simon, i like it. i think the euro is back to trading on u.s. fundamentals and fiscal situation. right now europe is on the back burner. european yields have eased. spanish ten-year bond yield pushing eight month lows. italian yields at two year lows. right now we could push europe off to the side, focus on the fiscal situation. it's been kind of a rocky three days in the u.s. trading market. the point is it will impact the direction of euro/dollar. obviously here reid's comments sent the euro in the risk trade back. obama/boehner comments about a possible agreement. geithner with congressional leaders would set up any kind of good news for a euro to push through that 1.30 level. >> what are your levels?

>> i like to go long. actually, i just bought euro literally in my hand held before i sat down at 1.29.70. you want to look for a push through that november triple top high over 1.30. we could target the 1.30, 1.40, the high from october. traditionally in the technical analysis world we have a triple top setting up. those do not hold. i like the trade up towards a test of that october high. >> i'm surprised you don't think the yen is a better trade at the moment. there's a lot of chatter everywhere else about it. >> it's a great point, simon. you know, the boj is doing everything they can to end their 13, 15-year deflationary cycle. my thought on that is you don't get hit by the train you see coming. i feel like the market is so focused on the short yen trade, i think it could work in the short term. you could pair a euro long like i'm talking about against the yen. but longer term i think the bank of japan is going to have a hard time creating the inflation they desire. good to see you again. todd golden joining us on our

money in motion segment. be sure to catch money in motion currency trading tomorrow 5:30 p.m. eastern. one more sleep. if you want more education about currencies, go to currency class at moneyinmotion.cnbc.com. still to come, republican senator rand paul of kentucky. he will not budge on the northwest tax pledge. we'll find out what he is willing to compromise on to rise above. house speaker boehner and other leadership members meeting with treasury secretary geithner this morning. boehner expected to hold a news conference after about 11:30 eastern. within the next 35, 40 minutes. we will bring that to you live on cnbc.

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negotiations. literally, eamon, you've been following him. >> reporter: feel a little like a paparazzi. we wanted to see if we could ask secretary geithner about what his plans are for today as he arrived at the capitol this morning. we had a chance to see the secretary as he came in. as you take a look at this video you'll see he was not at all in the mood to answer any of our questions. take a look at the video. >> what are you going to say to the senate majority leader, sir? >> reporter: so geithner there not telegraphing his negotiating strategy to those of us standing here in the hallway. he did go into harry reid's office. he once again ducked the press on the way out. there was a scrum of reporters waiting outside of harry reid's office to see if he would tell us anything there. he managed to avoid through the back hallways of the capitol building that scrum of reporters. here's now we're told in with speaker of the house john boehner. we'll try to get some word on what exactly is going on in that

meeting as soon as it breaks up. we are told by the treasury department not to necessarily expect what they call a readout, which is when they give us some official guidance as to what happened in that meeting. this is a very secretive negotiation. very tense. there are a lot of moving parts. they don't want to telegraph to the press and the markets what is going on. we're doing our best following him in the hallway here. >> that was a very real life moment as he passed the painter halfway up the hall on the right hand side. not the ideal security situation. >> reporter: the one thing you learn on stakeout duty in the capitol building, they never stop painting the inside of this building. so much beautiful artwork. they have to paint it constantly. >> you were our eyes and ears. i thought you were very polite. i'm shocked he didn't answer your question. eamon javers on capitol hill. about 30 seconds to the top of the hour. what's coming up tonight on "fast"? >> we heard curtis saying buy now ahead of the fiscal cliff.

is that true? we're going to give the fundamental as well as the technical take on whether or not the markets are, in fact, a buy here ahead of any sort of deal. >> all right. we'll talk some european consumer confidence in a little bit, simon? david, see you soon. if you're just joining us, here's what you missed earler on this morning. welcome to hour three of "squawk on the street." here's what's happening so far. >> the classic problem of the federal reserve is always, do you tighten up soon enough. when the process of inflation and the boom and the bubble are just beginning. because that's when it's hardest to do it. >> it's going to be a very slow growth year, i think, anyway, in the best of times. and if the more taxes we see next year, the slower the growth will be. >> but i do believe that when the smoke clears in this, we'll look at hurricane andrew in 1992 which ended up being a big boost to the gdp, three quarters,

after the next three quarters, that's sandy. we need more incentive. it's terrific to layer the capital some on what happens in washington. it's seemingly nothing to do with the compromise and rising above is maybe the devil's playground. there's the opening bell. >> i think people should buy some stocks now in order to protect against the transition from deflation to inflation. we've been in a deflationary period now for five years. it's really been driven by the collapse in the credit systems. i think they will have a framework for making the grand bargain in the next session of congress. but that's just more a hope than a firm prediction. >> we're checking our lists as the "squawk on the street" countdown to christmas continues. ho, ho, ho! ♪ oh, tannenbaum, oh tannin

baum ♪ >> a little early for nat king cole. good morning. a check on the markets on this thursday. dow holding on to a 43 point gain. s&p at 1416 has crossed into positive territory for november. in fact, it's bumping up against its rather important 50-day moving average. nasdaq up 21 as well. apple and research in motion leading the tech rally today. apple seeing some gains on the news the iphone 5 has won regulatory approval in china. rim meanwhile trading higher after an upgrade to buy from neutral at goldman. the firm citing potential gains from the blackberry 10 operating system which launches next year. barnes and noble one of today's biggest losers. down sharply after posting a slight drop in sales for the second quarter. retailer also reporting a loss of four cents and that did match analyst estimates. road map for thursday, lawmakers reneging on their pledge to never raise taxes. one senator is defending grover norquist's anti-tax stance. that's senator rand paul.

he'll join us live in a few minutes. even black friday couldn't save retailers from superstorm sandy. sales for november taking a hit in the wake of that storm. what does it mean, though, for the holiday shopping season? we'll tell you how to play it. a wade of companies issuing special dividends ahead of the fiscal cliff. sounds like a plus for the company. we'll tell you why it could be more of a warning sign. and how senate majority leader harry reid's home state of nevada could get hit hard if congress cannot make a deal on the fiscal cliff. we're going to start with the cme group. rick santelli, the santelli exchange. i'm told a little poetry. i just hope it's not frost saying some say the world will end in fire, some saying ice. >> it's not going to be fire and ice. it is going to be some fire and brimstone! how's that? you know, i liked warren buffett's op-ed the other day in the "time"s. a minimum tax for the wealthy. we're going to get to a couple quotes in that in a minute. the beginning promi inning prem

issue with. warren buffett lays out a notion once again how crazy grover norquist is because taxation doesn't really affect financial behavior. we could argue about that to the extent of degrees. but i would say two things. first of all, on grover norquist, you know, if you get married in front of a minister, priest or rabbi and you say your oath, and then a year later you don't like your wife anymore, do you go find that priest, minister or rabbi and beat them up and say, listen, get me out of this pledge! no. you made the pledge. it isn't the rabbi, the minister or the priest's fault. if you want to go back on your marriage, that's your decision. grover norquist really isn't the issue here. let's take it a step further. today we had mr. frank who i like with his wealth reports talk about all the behavior that is changing because of the fiscal cliff. patty dom writes a great piece picked up by everybody about how companies are actually going to the capital markets to get money

to give it away on a dividend before december 31st. mr. buffet, i ask you, does that sound like a behavioral change to you? i think it does. now, let's go to a line that mr. buffett had in his op-ed piece. put it on the screen. i will read it. this is in the context of tax reform, which is what this hit's about. but the reform of such complexities should not promote delay in our correcting simple and expensive inequities. we can't let those who want to protect the privileged get away with insisting that we do nothing until we can do everything. i agree. dodd/frank in two weeks is going to be two years old. the volcker rule continues to be unwritten. jamie dimon said a third of the entire thing is written. two-thirds aren't. my issue here is, if people are going to break their promise, do it for a very good reason. the reason needs to be guaranteed reform!

because you know what? reform is always the road less traveled. a quickie deal, you know what a quickie deal means? that reform stuff, we'll get to it. right around the time we finish dodd/frank. back to you. >> we keep talking about kicking the can. a framework. a lot more from you later on. rand paul in a couple minutes, too. not all retail getting beaten down today. over to mary thompson for a quick market flash. >> that's right, carl. kroger which is a supermarket operator, second best performing stock in the s&p 500. also trading at a multiyear high today. as you can see up 3.7%. the reason the company beat earnings estimates for the third quarter and then raised its outlook for the full year. the company reporting strong same-store sales numbers for the third quarter of just about 3.2% in that very competitive supermarket space. carl, back to you. >> thanks. talk to you in a little bit. capital markets op-ed this morning. gary kaminsky wants to focus on the fed's exit plan from qe. do we need a hard hat for that? >> we'll get to that in a

minute. good investing is trying to rethink your thesis every day. one of my mentors in the business, mark howard, 25 years ago, we had to rip up the portfolio literally every night and say is this the portfolio we want for tomorrow? reflecting on watching the tame yesterday after that "wall street journal" piece about qe-4, 5, whatever we want to call it, then the market reaction, it reminded me once again that you have to recognize that despite the fact that we think there's qe forever, every time it gets mentioned again, the stock market's going to go up. you have to have your strategy lined up in that type of a methodology. but i will say this. everybody wants to know when is it not going to work anymore? when is it not going to be that qe is mentioned and the stock market won't react positively here? what i was thinking about was a visit we had with jeffrey dunlap back in september when i asked him about an eventual exit of qe if and when that happens in our lifetime. let's remember what he had to say when i asked him that question. play the tape.

>> when the fed wants to exit, they will have to approach people like you. will you buy bonds from the fed when they want to sell bonds? >> i think it's more likely that the fed buys all the u.s. treasury bonds that exist than they're going to work the opposite direction, start sending them. i have no concept of what the fed exit strategy would look like nor does an investor or reviewer need to have a concept because it's way out in the future. >> there you go. basically, people start to worry about what this exit will look like. jeffrey gundlach tells you the fed can't exit. until there is a focus on an exit, i guess the strategy is very simple. every time there's a mention of qe, even though we know there's qe to infinity, the stock market is going to react positively to it. >> i'm not going to let you leave without talking about that hard hat. what's the hard hat? >> you know fireman ed. jet fans, you know fireman ed retired. we were playing around with this hat. we always talk about if

something was a stock. i have to say if the new york jets was a stock, you know where that stock would be? zero. zero. zero. i'll see you in a little bit. >> liquidation. okay. thanks, gary. senator schumer speaking on the senate floor on tuesday saying that some republicans are looking to separate from the norquist tax pledge. take a listen. >> republicans in both the house and senate are deciding they no longer want to be married to this pledge. republicans are saying they want a divorce from grover norquist. >> senator rand paul of kentucky has spoken out in favor of the pledge this week. says he does not support raising taxes to avert the fiscal cliff. senator rand paul joins us this morning from capitol hill. senator, good morning to you. >> good morning. i'd like to know, when did chuck schumer start attending the republican caucus meetings? who let him in? >> he seems to have some unique insight into what the gop is thinking. what do you think is going through his mind? i'm sure he could point to a chambliss or a graham, could he

not? >> i don't think chuck schumer now speaks for the republican party. so he should probably stick with his own party as far as being a spokesman. what i would say is it's always been the republican philosophy that we believe the best way to stimulate the economy is to leave more money in the private sector. i think most of the money that gets sent to washington is wasted and counterproductive. it goes into regulations and spending that is not wanted by any consumer. so we want to leave more money in the marketplace. it's always been our philosophy, and i think the few who appear to be back pedalling, if you listen closely, i don't think they're jumping up and down to raise taxes. we'll see in the end how they vote. >> you said recently about the pledge, i'm a huge fan of the pledge. and i think it does hold people's feet to the fire and they've essentially signed their signature and said they're not going to raise taxes. if they go back on their word, they'll suffer the repercussions in the next election. but you've also said the party at large has an issue in danger of becoming a dinosaur, in your

words. how do you demonstrate compromise if every day you're beholden to something that you signed years and years ago. >> i'm not beholden to a pledge. i am in favor of a philosophy and i was elected on a philosophy, smaller governments, less debt, balanced budgets, and a belief in the private marketplace and leaving more money in it. is isn't that i'm beholden necessarily to a pledge. but as far as compromise, there does need to be some compromise. we need to reduce spending across the board. that means republicans like myself who believe in a strong national defense have to admit that not every dollar spent on the military is wisely spent or frugally spent and we'll have to compromise there. the liberals will have to admit the same for domestic spending, entitlement and welfare. if both sides compromise then we can reduce spending. spending is at 25% of gdp now. just four years ago it was at 20% of gdp. this is a spending problem. the only way in which it's a

revenue problem is that we're in the midst of a recession. because the recession, revenue is down. but if you raise tax rates, it's not a given that you'll get more revenue. you may well get less revenue with higher rates and you may well hurt the economy further which makes revenue even worse. >> yeah. on a framework itself, you've been asked recently if you think we'll get one. you said we would get one, but it would be big, bad and ugly. what do you mean by that? >> at the end of the year, a lot of people want to go home so they stuff a lot of things that have to be done into one big, bad, ugly bill and it gets passed. that's the history of washington. i see no reason to think it won't happen again. but what i'm afraid of is that a lot of stuff will get put in there. for example, we just raised the debt ceiling $2 trillion a year ago. over $2 trillion. we're going to do it again? people up here are not to be trusted with money. they are not good with money. there's no secret of that. do not send your money to washington. it's the last place you want to

send your money. we are not acting responsibly. we pass statutory caps. the budgetary control act. the sequester. they all came from last year when we said we were going to reform our ways and be better stewards of the money. we're already going back on our word. so don't send anymore money up here. if anything, send more rules. the rules should be you have to balance your budget every year like every american family. >> senator tom cole of oklahoma says let's at least try to get the middle class out of the burning living room when it comes to tax increases come year end. are you in favor of doing something that's at least operative in the very near term on that front? >> here's the logical problem with this. everybody seems to agree, republican or democrat, if we crazed everyone's taxes, it will be bad for the economy and hurt economic growth. so if we raise everyone's taxes, it'll be a $2 trillion tax increase. well, if we raise it only on the rich which the president wants to do and the democrats, that's 40% of the nation's income.

so it'll be a $900 billion tax increase. it isn't about who the tax increase is on. that's simply envy and class warfare. it's about how much money you're going to take out of the private sector. $900 billion taken from the private sector is an enormous drain and will hurt economic growth. doesn't matter whether it's rich people, middle class or poor people. it's money taken out of the productive sector, the private sector, and given to the nonproductive sector, the government. >> finally, we started the conversation talking about the pledge. when senator graham does, though, indicate his commitment is softening, do you have words with him later on? does he get scolded behind the scenes? >> i don't do any scolding. it's not my job to tell other senators or congressman how to vote or what to think. i try to communicate what i think is the message of our party. the message always has been and i think always should be that we're the party of limited government and balanced budgets

and low taxes and that we believe that less taxes will stimulate private business. we shouldn't abandon that philosophy. >> senator, appreciate your time as always. have a good one. >> thank you. >> senator rand paul of kentucky. on a day that tiffany is sharply in the red, we're getting a check on the outlook for luxury retail this holiday season. look at that. off more than 7%. we'll talk about it after the break. oh no, not a migraine now.

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luxury retailers are facing more than a few head winds this holiday season. courtney reagan is live in chicago today with more on that. morning, courtney. >> reporter: hi, fwood morning to you, carl. despite all those global economic pressures that you mentioned, a survey found that half of u.s. consumers still plan to buy luxury products in the next six months. so luxury retailers, of course, are hoping those consumers will realize there's no time like the holidays to splurge on a little bling. the last three months have been less than luxurious for a number of those high-end names. with the macroeconomic pressure weighing on consumers. tiffany gets nearly one-third of annual sales from the holidays. after today's big earnings miss, the luxury jeweler needs a strong season more than ever. the company missing on the top and the bottom lines. falling short on same-store sales estimates and lowering its full year earnings guidance. the ceo says an improvement in

the fourth quarter will come. at least that's his expectations. many analysts do think fortunes will reverse at least for some luxury players in q-4. when it comes to who's poised for a luxurious holiday season, many are counting on the high-end department stores over those pure luxury brand players. >> one of the best position stocks in our coverage on the luxury front is nordstrom. we think they've had strong traffic this far in the holiday season. we think they're very well positioned in places like california where we're starting to see some signs of a macro recovery. the other important thing, nordstrom doesn't have the exposure to the tourist consumer some of the other luxury players have. >> reporter: however, with the european debt crisis looming and that fiscal cliff still unresolved, the robin report's robin lewis thinks many luxury buyers may be holding back this holiday season. >> i think that will cause some cautious spending in the last holiday season, in the last

quarter. and if the resolve is made to increase the tax rates of the rich, it will definitely hit the pocketbooks. >> reporter: and there's no doorbusters for luxury players. they're banking on their price premiums and their quality to drive sales. later today, carl, i'll sit down with burberry ceo. we'll talk about all things luxe. straight ahead, why the secret to housing reform might be reforming the fha itself. a little bit laeter, how to play the retailers ahead of this holiday season. "squawk on the street" is coming right back. if you are one of the millions of men

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dow's up 41 on a week where we've got a lot of housing data. rick santelli's going to talk some housing in chicago, right, rick? >> absolutely. we have a very distinguished guest. dr. anthony sanders. he's a professor at george mason university. welcome, dr. sanders. >> thank you, rick. >> you know, today i did my first part of the santelli exchange about the road less traveled. that road is always reform. and for a very easy reason. officials have this propensity to want to get re-elected. reform usually means there's something wrong that needs to be fixed. usually when something needs to be fixed, voters get impacted. housing the topic today. fha three years below their capital requirements, which is small. it's much smaller when they don't make it. we have ed de marco out today. i really like ed de marco of the fhfa, regulator on fannie and

freddie. saying housing's turning up. he's the only thing between taxpayer dollars and more programs to try to fix housing even though i think it's fixing by itself. i'm done talking. can we really do reforms to fha, to the gses? can we get away from 3% down? do you see any hope? give us your expert view on this, sir. >> no. i think the issue is i think ed de marco has done a great job with freddie and fannie. in fact, they've tightened up credit to try to turn a profit so much that, in fact, they're not really a player in the game for buying a home and financing it. the fha is the last man standing. this is sort of the perils of having central planning by the government for the mortgage market. fha took over for the subprime market. they can actually improve the fha. all they have to do is put a floor on the fico score. they had fico scores during the latter half of the bubble that were down to 400.

but, in any case, it's the down payments that still bother me. that is a politically charged issue. and i can't imagine the democrats in the senate going along with any kind of reform increasing the down payment. >> so you basically see no hope. we have a conservatorship. we have a checkbook. none of these entities need to go to any legislative body. they can basically go right to treasury and say, hey, mr. geithner, whoever your successor is, write us another check. is that not correct? >> that is correct. the fha -- actually, hud has to go to congress and ask for a change in the rules. for example, if they want to hike the insurance premium. dave stevens, former commissioner, actually raised the premiums. the premiums will be up. but i caution you and i caution ed that there's an article in the "wall street journal" today saying due to all the foreclosures that are suddenly going to break out into the market this coming year, they're seeing housing prices predicted to fall next year 3% to 10%. how is that going to work out

for 3% -- 3.5% down payment loans? >> you've pretty much made my case. it continues to really give me some agita that at a time we're talking tax reform, we have three years ongoing of no reform of the gses, no desire to reform it by either party. reprehensible. professor, dr. sanders, thank you for coming. carl, it's all yours. >> all right, rick. meantime, the bell's about to ring across europe with the dow hanging on to a 52-point gain. we'll talk about the impact europe might have on us this afternoon. plus, speaker john boehner will speak in just a few minutes on the fiscal cliff. you're going to want to hear what he has to say. we'll be right back. [ male announcer ] this december, remember --

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the european markets are closing now. >> with that a sea of green. simon hobbs. >> john boehner, the possibility he may speak. let's see how far we can get for a rundown of the european markets. should you be invested in european equities now? don't worry about today's trade. check out this board of where we are now on the dow jones industrial average versus what's happening in europe. see the late surge coming through from the european equities on the white line? you now have a substantial outperformance for the year from those blue chips on the other side of the atlantic. we talk about europe all the time. you know the dynamics within that. looking forward, goldman sachs is actually suggesting you will make more money in european

equities next year than you will in american equities. they believe that the dow jones stock's 50 will climb higher to 3,000. that's a 16% gain on that market. on the broader market next year in europe, goldman sachs thinks you will make 18%. its projection here for the s&p is for a gain of only 11% or 12%. it may be that you'll make more money according to goldman sachs next year in european equities. remember, if you are dollar based and you go and invest in europe and the fed keeps pushing the dollar down, that will only increase the disparity, the extra gain that potentially, potentially you might make in europe. today is an indication of the degree to which we seem to have confidence there about europe sorting out its problems. the ten-year italian bond fell to its lowest yields in two years. what does that mean? that means that the prices have surged to their highest level in two years. so those peripheral bond markets

are surging and, inevitably, the italian banks, for example, are doing well. they're sitting on so much italian debt. before i leave you a couple corporates i should mention. tale of two australian minors. rio tinto cut $7 billion in costs. stock higher almost 5% as you can see. it's been a really poor trade during the course of the year. and billiton, another global miner, held its agm in australia in sydney. still very evasive on the success plan there. actually, bhp billiton again today is up 2%. generally miners and metals in europe have done very well. copper has come back. there seems to be a lot more optimism around, carl, as you can see. back to you. >> copper has been a heck of a story today, all around the world. thanks, simon. capital markets op-ed.

gary's going to weigh in on the drama that is s.a.c. this week. >> i'm told we may have to interrupt me so interrupt if you need to. this is an opinion piece. in the control room put something there in the lower third. opinion. opinion. i'm doing this, carl, because so many people want to know what do i think what's happening with s.a.c. obviously i've got insight. i've spoken to former employees. i obviously know many people that work there. i have not spoken to anybody that's a current employee of s.a.c. this is my own interpretation. my opinion about what i think obviously based on many, many years of experience in the industry. it comes down to this. i know when we were very close, when we were managing position, we spoke to people in the industry or company, if i got an e-mail from a ceo and i was concerned about whether the information that was in that e-mail might have been tainted, per se, i'd immediately alert compliance. we'd let compliance have it in the record so we knew we had covered ourselves. i want to say this about stevie cohen. this is a guy who has built a

teflon circle around his own port tofolio management. what we know from the martoma indictment earlier this week, there was something that happened between e lan pharmaceuticals, wyeth and s.a.c. what we don't know is how many other situations there are within s.a.c. where an analyst or a portfolio manager spoke to somebody who was in an expert network and as a result of that the company did something. so this is a very important point to remember. we know they made a lot of money as a result of a discussion with the expert network in these two securities. both on the buy side and then the short side. what we don't know, carl, is how many examples they have that they can say we did the exact same thing. an analyst spoke to somebody in the expert network. we then took action. as a result of it, we lost money. that will be the key, my friends, to what ends up happening at s.a.c. and i bet you that they will be able to show evidence that they did exactly that over a long

period of time. that is my opinion, carl. >> point taken, gary. thank you so much for putting in that framework as well. bob pisani at post 9 looking at -- what are you looking at? technical levels? >> the market has convinced itself a deal is coming on the fiscal cliff. whether it's going to be enough to avert problems in the first quarter and potential doubt downgrades, we don't know. they expect not only that it's going to come but that it's going to be substantive. not just a little nonsense deal. something that will really make a difference and avoid debt downgrades down the road. that's what they're worried about. look, we've been rallying almost every single day since november 8th. almost. not quite. that's a pretty nice upward climb from where we were just about 2 1/2, three weeks ago. nice broad advance today. 3-1 advancing to declining stocks. that's very healthy. not just one little sector. look, when you get everything up like this, all the major names here, health care, financial, technology, when you get health care mixed in with materials, that's a broad advance.

it's not cyclical names that are just moving or names that are risk on that are just moving. the whole market is sort of moving to the upside. all right. the exception is retail stocks. put up the horrible mess retail is. they got it wrong, okay? that's what happened in september. look at this. 6%, 7%, 8% declines. tiffany missed on the earnings. everybody else missed on their same-store sales. this was really hard to get right. the impact of sandy and the impact of the elections. how do you model for that? the estimates came down for november. for weeks they have been coming down. they just got it wrong. the impact was a little bigger than anticipated that the modeling represented. so they were wrong. improvements in the second half, though. notice the comments? read what they said. most of them said second half of the month much better and very solid comments on black friday and cyber monday as well. here's the question. the only thing that matters now is what's going to happen in december. a little hard to play and predict this one. they seem optimistic. however, i will bet you you're going to see a little bit of

panic here and likely you'll see more promotions. a little more competitive. margins may be impacted on that. beyond that it's going to be very hard to say what's going on. let's move on. i'm very worried about china. i know i'm making a left turn here. i was optimistic on china along with a lot of people in september and october with the new leadership coming in, potentially big infratruckture programs. guess what. they're there. leadership's in. nothing's happened. we're at another, again, the whole world was up overnight except china. mainland china. shanghai, another 3 1/2 year low. it hasn't made a difference. mainland investors seem to be fleeing. these are the "a" shares. only mainly chinese investors can invest here. look at hong kong, though. explain this to me. one of the great divergences i've seen in my entire life. hong kong on the white line. here's the shanghai market, mainland china market. look at the divergence. this has happened in the last few months. mainland china investors seem to have fled their own markets. hong kong up 19% on the year. shanghai is down 11%.

folks, that's weird. something is going on here. something's going to give here. this can't keep going on. we're in the going to keep having these wide divergences for the whole year. hong kong is going to come down or shanghai come up. it's obviously people trying to figure out if the chinese authorities are going to be involved in going out and stimulating the economy, providing new infrastructure, or whether the capital flight people we're talking about from the mainland continues or not. a tough one to call. all i can tell you is the bums were wrong on mainland china. buying in september ahead of the leadership proved not to be a great investment so far. i'm sorry about that. because i talked a lot about it, frankly. >> it's a head scratcher. every morning you come in and see what shanghai as done. unbelievab unbelievable. as you're talking, kbw. special dividend. $2 a share. ten times the current annual dividend of 20 cents. interestingly they are going to cut the cash part of the stifel

deal to reflect a special dividend. brief spike there. >> great company. >> another one onboard. >> sold for very little premium, unfortunately. this is a very fine, highly respected boutique organization. highly respected in financial services, financial advice that sold the company with very little premium. it's a sign of how difficult the whole business is right now. >> overall yield is just 1%. $2, that's going to get your attention. we'll see where the stock goes from here. meantime, a hotel chain stock with a stealth rally today. over to mary thompson for a market flash. >> taking a look at shares of marriott moving higher throughout the day. interesting to look at the intraday chart. a pop at the opening session. another one about an hour or so ago. volume is fairly heavy. not quite at the ten-day average yet. fairly significant early on. moving higher along with its rival starwood hotels, though not to the same extent in some

of the s&p leisure. retail, same-store sales from september pouring in with misses. welcome back. good to have you. >> thank s for having me. >> can this all be the storm? >> maybe not all the storm. you know, a lot of the retailers did say the first half of the month was quite different from the second half of the month. thinks did pick up a lot. clearly black friday, cyber monday helped. we are encouraged to hear those good friends. if you kind of remove that first, middle part of the beginning of the month, the trend line's not that different from where it had been. maybe consumer is okay here. >> joe, i want to continue the conversation. we do have speaker boehner starting a presser here, having come out of that meeting with the treasury secretary. here he is. >> members of his own party seemed quite comfortable of sending the economy over the fiscal cliff. two weeks ago we had a very

productive conversation at the white house. but based on where we stand today, i would say two things. first, despite the claims that the president supports a balanced approach, the democrats have yet to get serious about real spending cuts. secondly, no substantive progress has been made in the talks between the white house and the house over the last two weeks. listen, this is not a game. jobs are on the line. the american economy is on the line. and this is a moment for adult leadership. campaign style rallies and one-sided leaks in the press are not the way to get things done here in washington. majority leader and i just had a meeting with the treasury secretary. it was frank. and it was direct. i was hopeful we'd see a specific plan for cutting spending. we sought to find out today what the president really is willing

to do. listen, i remain hopeful that productive conversations can be had in the days ahead. the white house has to get serious. yesterday our leadership team met with bowles and business leaders about averting the fiscal cliff and achieving the balanced approach the white house says it wants. i've made clear that we've put real concessions on the line by putting revenues on the table right up front. unfortunately, many democrats continue to rule out sensible spending cuts that must be part of any significant agreement that will reduce our deficit. mr. bowles himself said yesterday there's been no serious discussion in spending cuts so far. unless there is, there's a real danger of going off the fiscal cliff. listen, going off the fiscal cliff will hurt our economy. it will cost american jobs. republicans have taken action to avert the fiscal cliff by

passing legislation to stop all the tax hikes, to replace the sequester and pave the way for -- pave the way for tax reform and entitlement reform. and we're the only ones with a balanced plan to protect the economy and protect american jobs and protect the middle class from the fiscal cliff. but without spending cuts and entitlement reforms it's going to be impossible to address our country's debt crisis and to get our economy going again and to create jobs. so right now, all eyes are on the white house. the country doesn't need a victory lap. it needs leadership. it's time for the president, congressional democrats to tell the american people what spending cuts they're really willing to make. with that, i'll take a few questions sfwl speaker boehner, why will you not tell democrats what specific spending cuts you would like to see, especially within entitlements? >> it's been very clear over the last year and a half, i've talked to the president about

many of them. you can look in our budget. where we outline very specific proposals that we passed in last year's budget and the budget from the year before. we know what the menu is. what we don't know is what the white house is willing to do to get serious about solving our the debt crisis. >> so your 2011 position still stands, then? are you still offering those talks from 2011? is that still the basement here? >> i'm not going to get into the details. it's very clear what kind of spending cuts need to occur. and -- but we have no idea what the white house is willing to do. >> at this point, most public statements have been optimistic, confident, hopeful. we're all sensing a very different tone from you right now. are you walking away from talks? have things completely broken down, mr. speaker. >> no, no, no. no, no, no. stop. i got to tell you, i am

disappointed in where we are and disappointed in what's happened over the last couple of weeks. but going over the fiscal cliff is serious business. and i'm here seriously trying to resolve it. and i would hope the white house would get serious as well. >> is this assessment -- is this assessment of yours based on the meeting with secretary geithner or your phone call with president obama last night and can you tell us something about that phone call? >> well, we had a very nice conversation last night. it was direct. and straightforward. but this -- this assessment i give you today would be a product of both of those conversations. >> how much would you be open to the idea of discretionary spending cuts as part of a down payment to get to a longer range solution on entitlements and tax reform. >> there are a lot of options that are on the table including that one. >> mr. speaker, before the

election you were asked whether if obama won, taxes would have to go up. you've made it sound like you would oppose that. now you've -- you're acknowledging that they will. >> the day after the election, i came here and made it clear that republicans would put revenue on the table. as a way to begin to move the process to get this resolved. >> right. so my question is, what -- what message do you have for people who look at the negotiating position and see that it's -- or believe that it's inevitable that you'll have to accept some compromise like the actual rates? >> revenue is on the table. but revenue was only on the table if there were serious spending cuts as part of this agreement. it has to be part of the agreement. we have a debt crisis. we're spending too much. and while we're willing to put revenue on the table, we have to recognize, it's the spending that's out of control. >> mr. speaker, roughly what size spending cuts do you think

it would take to reach a deal on the fiscal cliff, and do you think that at least the promise of spending cuts has to be included in this level deal at this time? >> i don't think there's -- i don't think it's productive for either side to lay out hard lines in terms of what the size of the spending cuts ought to be. there's clearly -- there are a lot of options on how you could get there. but the second part of your question was? >> my question is, do you think the promise of spending cuts has to be included in the deal that averts the fiscal cliff? >> there's a framework that we presented to the white house two weeks ago. the framework is -- has been agreed to in terms of really a down payment on the end of this year. now, that would include spending cuts and it would include revenue. setting up a process for entitlement reform for next year and tax reform for next year.

but -- but -- but this is way out of balance. and not a recognition on the part of the white house about the serious spending problem that we have. >> faced with the prospect of going over the fiscal cliff, which you just called serious business, or extending the lower tax rates and not the upper ones, which one would you choose? >> i'm going to do everything i can to avoid putting the american economy, the american people, through the fiasco of going over the fiscal cliff. >> which is worse, though, for the economy? >> what's that point of balance you just spoke about? could you put a debt limit increase in the overall package? >> as i told the president a couple weeks ago, there's a lot of things i've wanted in my life. but almost all of them had a price tag attached to them. and if we're going to talk about the debt limit in this, then we're probably -- there's going to be some price tag associated with it. >> last question.

>> are you standing by your dollar for dollar -- >> i continue to believe that any increase in the debt limit has to be accompanied by spending reductions of that -- that meet or exceed it. >> thank you. >> with that, the happy talk azharry reid called it the other day is basically a thing of the past. speaker boehner saying he is disappointed in where we are. democrats have not gotten serious about putting spending cuts on the table. says this is not a game, in his words. with that, the dow lost essentially 50 points in about one tick. eamon javers is in washington with some reaction to what speaker boehner just said. eamon, what's your take? >> carl, it's important to put this in context. what you're hearing there is a negotiation. when the speaker says there hasn't been substantive progress over the past two weeks, what he is saying is he'd like to see more concessions from the democrats. he'd like to see them put specific spending cuts on the table. and he's saying that he himself

is not going to do that. he's going to wait for them to go first. the speaker here is really saying the ball is in the white house's court. he was very careful to say these negotiations have not broken down. they're not walking away from talks here. this is part of a back and forth we're going to continue to see o a deal, maybe even within hours of a deal, we'll continue to see rhetoric like this on both sides. interestingly enough, he talked about his visit with the secretary of the treasury, tim geithner, which just happened within the hour but he did not say at all what geithner did say. he said that geithner didn't offer him specific spending cuts but he didn't say what was in geithner's offer, presuming there was one. in theory, geithner came up here to say something to speaker boehner. we didn't learn what that was, other than boehner now is disappointed, carl. >> it's not just the inclusion of what they say but the omission, often times. you're right, he was asked specifically are you walking away. in his words, no, no, no. they're trying to keep the point alive that the talks are in fact

alive as well. eamon javers on capitol hill, thanks. a columnist for yahoo! finance -- disclosure -- cnbc and yahoo! have a business alliance to share and produce editorial content. mike, welcome back. it is an illustration of just how vulnerable we are in getting buffetted by these talking points. >> you almost feel like if the market is flat after the press conference it is kind of a victory because of what have damage might have been done. i do think both sides are sitting there flinching -- both sides meaning buyers and sellers -- both flinching because of this fear both negotiating have in their game plan a line that says, and then the markets panic, and then the other guy comes to us. we don't want to see it going down that game of chicken path. >> john carney has a nice tweet. we talk about risk-on and risk-off, maybe we should talk about cliff-on, cliff-off, because we have portfolios built

on that entirely a scenario. >> you see the indexes moving when it comes to different nuances in terms of the commentary. we don't see the bond market starting to price in that much less growth or more growth or anything like that. it is really more about psychology of the markets at play in realtime. >> on your point of staying flat, as maybe a good sign, we are up off just about four points from the flat line. stick around? "squawk on the street." quick break, don't go with the ability to improve roi through seo all by cob. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. i'm going b-i-g. [ male announcer ] good choice business pro. good choice. go national. go like a pro. [ male announcer ] good choice business pro. good choice. wooohooo....hahaahahaha!

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despite the claims the president supports a balanced approach, the democrats have yet to get serious about real spending cuts. secondly, no substantive progress has been made in the talks between the white house and the house over the last two weeks. >> speaker boehner finishing a press conference in the past few minutes that really explains where we are in the markets. we were up about 50 points or so. we were chatting off air. some trader friends of mine says he didn't even finish his first thought before you saw the market begin to tank. you were watching on the word "disappointment." >> we backed off a little bit when he said i'm disappointed. i do think it was maybe significant he's sort of saying some democrats are not serious about this. it wasn't so much a personal thing. he may even have taken the chance to say we had a nice conversation, the president and i yesterday. who knows if that was just pulling a few punches. >> i'm wondering what you thought of yesterday's reversal. it had everything. you had some data.

you had hills and rath of the journal talking fed. commentary on the cliff. why would you be down 100 and close up 100? >> i actually think the down 100 piece to me is more about people -- a muscle memory to say this can't hold. a level right here is just a little too fragile. we're going to have a self-first instinct because we don't really trust that post-thanksgiving or thanksgiving rally at this point. why would you have the reversal? i really don't know. to be honest with you, i think both sides are very gun shy. buyers and sellers are not, i don't think, don't have deep conviction in the next 5%. maybe they have deep conviction beyond that. but to me it was about the aggregation of news and the idea, look, we're not actually loading up more ammunition with the fiscal cliff situation. it's much more about kind of negotiating quasi publicly. >> we are a tool in this whole game. that's for sure. a lot more on the markets and reaction to speaker boehner's comments in just a moment. e tems when you can prevent the acid that's causing it with prevacid24hr.

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♪ ...or you can get out there with your family and actually like something. ♪ the lexus december to remember sales event is on, offering some of our best values of the year. this is the pursuit of perfection. welcome back. one final comment. you talked about these special dividends. we've got another one this morning. you see it as a sign they've been operating with less than efficient balance sheets. >> that's right. look, all else being equal you have the extra cash you don't